General Instructions for the Royal Bank of Scotland Plc, National Westminster Bank Plc

GENERAL INSTRUCTIONS FOR THE ROYAL BANK OF SCOTLAND PLC, NATIONAL WESTMINSTER BANK PLC AND OTHER RBS GROUP SUBSIDIARY COMPANIES

RESIDENTIAL PROPERTY

LEGAL CHARGE

GENERALINSTRUCTIONS

IMPORTANT: These General Instructions only apply to those Residential property transactions instructed by the Bank’s Credit Documentation Department(or any other area of the Bank referencing these Instructions in relation to security over residential property).
These General Instructions do not apply to mortgage transactions instructed by the Bank’s Mortgage Centres.

(08/18)

index

Page No.

INTRODUCTION1

YOUR RELATIONSHIP WITH THE BANK3

Conflict ofInterest3

Legal Advice3

Fees………………………………………………………………………………………...4

Safeguards…………………………………………………………………………………5

Document Completion…………………………………………………………………….5

PROPERTY RELATED ISSUES6

Valuations7

Recent Dealings…………………………………………………………………………...7

Certificate of Title & Request for Funds………………………………………………...7

Waiving Requirement for Independent Title Check…………………………………….8

LEGAL CHARGES9

Legal Charge Forms9

Legal Chargesin Support of Guarantees 9

TRANSACTION-SPECIFIC ISSUES10

Second (or subsequent) Charges……………………………………………………….10

Priority Arrangements…………………………………………………………………….10

Residential Tenancy Agreements.11

Other Interests in theProperty………………………………………………………….11

Withdrawable Agreements.12

Legal Charge on Purchase or Transfer………………………………………………….13

Letter of Consent/Early Completion.……………………………………………………13

Third PartySecurity………………………………………………………………………13

CUSTOMER/OwnerSPECIFIC ISSUES14

Non Standard Customers..14

COMPLETION15

SDLT and Land Registry Fees……………………....15

Transmission of Funds15

Cases not involving any Release of Funds…………………………………………….16

Post Completion Requirements16

Required Documents……………………………………………………………………..17

1

introduction

These General Instructions, read together with our transaction specificInstruction Letter,set out our requirements for solicitors and conveyancers in connection with Legal Charges and related issuesinvolving Residential property. They form part of all instructions where the Instruction Letter refers to them, whether the security is being granted to The Royal Bank of Scotland plc, National Westminster Bank Plc or any other RBS Group subsidiary.

IMPORTANT
These General Instructions only apply to those Residential property transactions instructed by the Bank’s Credit Documentation Department (or any other area of the Bank referencing these Instructionsin relation to security over residential property) (“CD”). For non-residential property please refer to our equivalent General Instructions Commercial Property.
These General Instructions do not apply to mortgage transactionsinstructed by the Bank’s Mortgage Centres.*
Residential property is defined as:
any property used only as a single private residence,either by the owner or by a tenant.
Residential property developments,blocks of flats or houses converted to flats for multiple occupancy and property comprising both residential and commercial (e.g. shop with living accommodation above)are categorised as Commercial.
* Mortgage instructions issued by our Mortgage Centres will be by reference to the CML Lenders Handbook for England & Walesand are covered by a separate RBS website (Mortgage Documents for Conveyancers).These General Instructionsdo however also make a number of references to the CML Lenders Handbook.

References to Owner mean the owner of the property and, where appropriate, also includes someone other than the owner who is borrowing from the Bank.

Styles of documents for transactions involving The Royal Bank of Scotland plc or National Westminster Bank Plc are on this website. Please take care to ensure that the correct branded styles are used – our Instruction Letter will detail the Bank. If the Bank is another RBS Group subsidiary you will be advised in our Instruction Letter and you must use and tailor the styles referenced ‘Non-branded forms’.

CML Handbook: Throughout ourInstructions, where applicable, you will find cross references to the CML Handbook forEngland & Waleswhich comprises a generic Parts 1 and 3 and lender specific Part 2. The RBS Group has a number of mortgage brands and businesses each with their own Part 2. In all cases covered by these Instructions, (regardless of brand/bank) please use“The Royal Bank of Scotland plc” Part 2,with the exception of the Bank’s contact point which will be set out in ourInstruction Letter.

Key Steps

To ensure that transactions proceed smoothly, you mustcomply with the followingKey Steps:-

Key Step 1

You must review our Instructionsand if you are unable to act forus, you must contact CD immediately and no later than 7 days from the date of ourInstruction Letter.

Key Step 2

No later than 5 business days prior to completion (where a release of funds is involvede.g. purchases and remortgages) or immediately following the signing of all required documentation including our Legal Charge(for all other cases) you must provide CD with the Key Step 2 Notice incorporating theCertificate of Title ( Request for Funds) supplied with our Instruction Letter.

Any outstanding Material Issues must be advised immediately to the Bank contact (as detailed within the Instruction Letter) and not dealt with via a Qualification Schedule. See the Property Related Issues section (sub-heading “Certificate of Title”) for further details.

IMPORTANT: No changes, other than required insertions/deletions, maybe made to the Key StepNoticesor the Certificate of Title. Please use the form of Key Step Notices supplied. There is no need to transfer on to your own headed paper.

Any difficulties in complying with these Key Steps requirements should be referred to CDat the earliest opportunity.

YOUR RELATIONSHIP WITH THE BANK

We will assume that you are prepared to act for the Bank in accordance withour Instructions unless you advise us to the contrary within 7 days of receiving our Instruction Letter. All correspondence or enquiries, unlessotherwise indicated, should be directed to CD at theaddress in ourInstruction Letter, quoting thereference specified.

Our Instruction Letter and these General Instructions form the contract between you and the Bank. The Bank will not accept/sign any Terms of Business/Engagement letter.

We will rely on the Certificate of Title you provide at Key Step 2.The Required Documentsyou deliver to CD will not be checked.

Please note that wehave in the past suffered loss as a result of Solicitors releasing Instruction Letters to third parties. Any documentation/papers you receive from us must be held to our order, treated as confidential and not released without our written consent.

CONFLICTS OF INTEREST / BACK TO
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If you are also acting on behalf of the Owner, we believe that the limited services we are asking you to provide are consistent with your duties relating to potential conflicts of interest under the current Solicitors Regulatory Authority Code of Conduct as there is substantially common interest between the Bank and the Owner regarding matters of title and efficient processing of the steps necessary to complete the transaction. But we do understand that you have to make your own judgement on this question.

If you decide that you are unwilling to act for both the Bank and the Owner please advise CD within 7 days from the date of our instruction letter so that instructions can be given to another firm without delay.

See also Section 5.2.1 of the CML Handbook.

LEGAL ADVICE / BACK TO
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All our Legal Charges and other security documents contain a heading giving a recommendation that signatories take legal advice. Where you are acting for both the Bank and the Owner (or another signatory) you must be satisfied that the signatories are advised of the effect of signing the documentation.

In Third Party Security and Legal Charge in support of Guarantee transactions it is the Bank’s policy that Third Party Owners/Guarantorsmust obtain legal advice in relation to the granting of the security. Where you are to provide the Third Party Owner/Guarantor with legal advice, we ask you to sign the certificate to this effect on the Third Party Charge/Guarantee. In providing such advice you must comply with the requirements set out in The Royal Bank of Scotland –v- Etridge. To assist in providing the legal advice we will supply a Schedule of Liabilities/Security with our Instruction Letter which gives details of the liabilities of the Customer to the Bank.

Where you are acting in connection with a direct Legal Charge but not the Guarantee it supports (because it is an existing one or the Bank is dealing with the Guarantee) we will tell you in the instruction letter. You must then advise the Owner that the charge is all monies and will secure the Guarantee as well as direct liabilities to the Bank.

If in a Third Party Security or a Legal Charge in support of Guarantee transaction you are acting solely for the Bank or are otherwise unable to provide a Third Party Owner/Guarantor with the required legal advice e.g. because you consider you have a conflict of interest, then you should arrange for the relevant Third Party Owner/Guarantor to nominate another firm to act in the matter. Once the nomination has been made you should submit the following documents to the nominated firm:-

• Legal Charge and/Guarantee (with the request that the certificate regarding legal advice be completed).
• Where the Guarantee already exists or is being taken separately, the Legal Charge with the information that it will support both the Guarantee and direct liabilities and a request that they confirm to you that appropriate advice has been given.
• Side Letter (Third Party Security only)
• Any Schedule of Liabilities/Security supplied by the Bank

and ensure that the nominated firm is aware of our requirements. You must ensure the Third Party Owner/Guarantor has signed the Legal Charge/Guarantee and that the nominated firm has signed the certificate on the Third Party Legal Charge form/Guarantee to confirm legal advice has been provided or confirmed to you in writing that they have explained the Legal Charge will secure all obligations to the Bank including obligations under the Guarantee.

Our Key Step 2 Notice contains a confirmation that the appropriate action has been taken.

FEES / BACK TO
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Acting for Bank only

You must liaise with the Owner’s Solicitors to ensure that our understanding of the transaction is correct and to gather all relevant facts to allow you to provide a fee quote. We require the question of your fees to be dealt with at the outset to avoid any dispute at a later date and would prefer your quote to be provided on a “capped basis”.At the same time as you provide CD with your written quote, please also provide a copy ofthis quote to the Owner’s Solicitors. At the end of the transaction your fee note should be issued to the Owner’s Solicitor for settlement.

If you are required to undertake additional work to that originally instructed, CD must be advised of the additional work involved (and the reason for it) and be provided with a revised capped fee quote. Any revised quote must be approved by CD prior to the additional work being undertaken.

If you are unable to provide a fee quote on a “capped” basis, please advise CD as soon as possible, setting out the parameters on how you would be prepared to provide your fee quote.

All Cases

Your fees will be paid by the Owner(either director if appropriate via the Owner’s Solicitors) unless we advise to the contrary in our Instruction Letter.

It is your responsibility to obtain the amount you need to pay Stamp Duty and Land Registry fees and to make arrangements for the payment of your own fees before you complete and/or release our advance. You must not complete unless you are in a position to register our Legal Charge.

SAFEGUARDS / BACK TO
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Please refer to Section 3 of the CML Handbookfor our requirements in relation to:-

• Law Society Green and Pink cards (mortgage fraud and undertakings)
• money laundering
• identity/signature verification

DOCUMENT COMPLETION / BACK TO
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To assist you with the completion of our Legal Charges, Deeds of Priority and other Ancillary forms available from this website we have inserted field codes into our documentation. You can navigate to these field codes by pressing F11 on your keypad.

The field codes will take you to the sections we require you to complete or select/delete optional clauses and signing blocks. All sections in the documentation should be completed and, where appropriate, optional clauses deleted and correct signing blocks selected before you print the document or form.

PROPERTY RELATED ISSUES

You must examine the title to the property andensure that the Owner has on completion of the Legal Charge a good and marketable title.

If your searches reveal the existence of any charge or other prior interest that we have not mentioned in our Instruction Letter you must tell CD immediately, advising of the impact the charge(s)will have on the Bank’s priority in ranking and awaitfurther instructions.

Our principalrequirements are as set out in the following relevant sections of the CML Handbookexcept that the contact point is the CD address specified in the headerin ourInstruction Letter:-

SEARCHES & REPORTS / Refer to Section 5.4
PLANNING & BUILDING REGULATIONS / Refer to Section 5.5
GOOD & MARKETABLE TITLE / Refer to Section 5.6
FREEHOLD & COMMONHOLD ARRANGEMENTS / Refer to Section 5.7, 5.8,5.9
RESTRICTIONS ON USE & OCCUPATION / Refer to Section 5.10
RESTRICTIVE COVENANTS / Refer to Section 5.11
LEASEHOLD REQUIREMENTS / Refer to Section 5.14
MANAGEMENT COMPANY / Refer to Section 5.15
INSOLVENCY CONSIDERATIONS / Refer to Section 5.16
POWERS OF ATTORNEY / Refer to Section 5.17
TITLE GUARANTEE / Refer to Section 5.18
BOUNDARIES / Refer to Section 6.2
PURCHASE PRICE / Refer to Section 6.3
INCENTIVES / Refer to Section 6.4
VACANT POSSESSION / Refer to Section 6.5
NEW OR CONVERTED PROPERTIES / Refer to Section 6.7
ROADS & SEWERS / Refer to Section 6.8
EASEMENTS / Refer to Section 6.9
RELEASE OF RETENTIONS / Refer to Section 6.10
NEIGHBOURHOOD CHANGES / Refer to Section 6.11
RIGHTS OF PRE-EMPTION & RESTRICTIONS ON RESALE / Refer to Section 6.12
IMPROVEMENT & REPAIR GRANTS / Refer to Section 6.13
INDEMNITY INSURANCE / Refer to Section 9

The following additional requirements also apply:-

VALUATIONS / BACK TO
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Our Instruction Letter will advise whether or not a Valuation Report is required which will be forwarded to you when available.

You must read the Valuation Report and contact the valuer promptly if you consider there are any issues arising from your examination of title which make the assumptions made by the valuer about the title incorrect or which are inconsistent with the Valuation Report. You must ensure that a copy of any letter to the valuer is also sent to the Relationship Contact as detailed within the Bank’s instruction letter.

RECENT DEALINGS / BACK TO
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You must advise CD if the property has been the subject of any dealing (purchase or charge) in the 6 months prior to the date of our Instruction Letter. In the case of purchases,CD must be notified of any relationship between the vendor and the Owner e.g. associated companies, common directors, etc. that you are aware of.

CERTIFICATE OF TITLE & REQUEST FOR FUNDS / BACK TO
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The Certificate of Title (& Request for Funds) forming our Key Step 2 Notice is by reference to the Certificate of Title referred to in IB (3.7) of the Solicitors Regulatory Authority Code of Conduct 2011.

Where a release of funds is involved the Certificate of Title (& Request for Funds), must be submitted to CD no later than 5 days prior to completion.Immediately after completion you must deliver to the Land Registry the documents necessary to register the Legal Charge.

In other cases (where no release of funds is involved),you must submit the Certificate of Title immediately after all required documentation including our Legal Charge has been signed and delivered.CD will acknowledge receipt of the Certificate of Title and request that you proceed to register the Legal Charge at the Land Registry.Any qualifications must be agreed by CDbeforethe Legal Charge is sent for registration.

In all cases where you are acting for the Bank only, you must attend to the registration of any transfer and the Legal Charge. Do not leave this to the Owner’s Solicitors.

The Certificate of Title should not be altered or amended in any way other than where insertions / deletions are required.

Any outstanding Material Issues must be advised immediately to the Relationship Contact (as detailed within the Instruction Letter) and not dealt with via a Qualification Schedule. Material Issues would include (but are not limited to) where;

• The owner does not have (or will not acquire on completion) good title to the Property;
• The Bank cannot obtain a good/valid/enforceable legal charge over the Property;
• The Bank’s Legal Charge will not have the priority ranking the Bank requires;

• Insolvency proceedings have been issued or are in place; and/or

• The transaction is reversible under the provisions of the Companies Act 2006 or the Insolvency Act 1986.

• During the course of the transaction you become aware that the borrower (or any provider of security) has not complied with the Bank’s anti-money laundering and and/or “know your customer” requirements.

• You become aware that the borrower (or any provider of security) has been convicted of a criminal offense involving dishonesty.

You should not delay notification of any such issues to the Relationship Contact until submission of the Key Step 2 Notice as this may delay the transaction.

You should only detail any Material Issues that have been fully resolved, or accepted to the satisfaction of the Bank by the Relationship Contact, within Part A of the Qualification Schedule. Including what actions have been taken to resolve, any Relationship Contact consent obtained together with brief details of the issue.

Other qualifications or limitations to the Certificate which you consider detrimental to our interests or the value of the property should be detailed together with appropriate commentsin Part B of the Qualification Schedule.

and should include:-

• an explanation of the nature of the issue;
• detail any mitigating actions recommended or undertaken
• an analysis of any remaining risk involved for the Bank; and
• confirmation that the matters have been disclosed to the valuer.

Any qualifications must be clear and unambiguous and limited to matters which in your opinion have an impact on:-